Defusing the Time Bomb - Pharmaceutical Executive


Defusing the Time Bomb

Successful Product Manager's Handbook

Plan for the Eventuality

Sound counter-generics plans, plotted early in brand life, include a primary course of action supported by contingency options.

In formulating strategies, the most-prepared companies consider not only the usual array of frontline tactics—litigation, pricing changes, and counter-promotion—but also clinical development plans that take years to execute, such as approvals for new formulations, new indications, and next-generation drugs.

The longer these teams have to prepare, the more comprehensive—and effective—their strategies will be. Solid, multi-tiered plans require years to work out and execute. And with generics manufacturers exhibiting legal aggression and a willingness to file ANDAs years before scheduled patent expiration, it is imperative that teams plan early for the loss of market exclusivity.

Given enough time, sound counter-generics planning contains different tiers of options that range from long-term lifecycle-management tools to short-term responses. Although ANDA filings and court proceedings often dictate the appropriate course of action, proactive teams counter attack on as many fronts as possible by:

  • Executing long-term franchise strategies
  • Developing line extensions
  • Ramping up patient-retention activities.

Ultimately, a third tier of market-crossover options also exists. Under these alternatives, companies limit their focus on prescription brand sales and instead look to authorized generics, generics subsidiaries, and OTC possibilities. Such tactics provide continued revenue streams, though they are not preferred choices for brand-conscious marketing teams.

Being Deeply Strategic

A multitiered counter-generics plan positions companies to attempt high-risk, high-reward opportunities while building contingency options.

One profiled brand invested a total of $32.4 million in its lifecycle-management and counter-generics plan. Of this amount, most went to franchise expansion. The company dedicated $31.1 million to the development of a next-generation drug breakthrough, along with necessary work for new formulations and new indications.

The company hoped to expand patent protection and to preserve sales through patent evergreening and, eventually, a new launch. When the ideal objective—a next-generation or combination drug—did not materialize, however, it was ready for the inevitable generics incursion. The company eventually altered its pricing and invested $500,000 in generics counter–promotion, and nearly a million dollars in litigation.

The task of defending an existing brand—particularly one that faces imminent patent expiration—is a difficult proposition. Companies can defend patents in court and dedicate dollars to R&D, but they risk unnecessary loss of revenue if they do not pursue a range of primary, secondary, and tertiary options.

Figure 3
Figure 3 shows that the third set of options is gaining favor. It compares the prevalence of strategies implemented in the recent past (2005 to 2007) with those planned for the near future (2008 to 2010).

The surveyed companies plan to dramatically expand their involvement in the generics market through generics subsidiaries and authorized generics.

In the past, generics subsidiaries typically have been limited to only the biggest industry players, but other companies are now venturing into the arena. Furthermore, despite criticisms, the surveyed companies plan to increase their use of authorized generics by 33 percent.

Thanks to the promise of ROI and extended patent protection, companies will continue their interest in the R&D-based tactics discussed earlier. Survey respondents anticipate expanded use of new-indication approvals (increased usage of 8 percent), combination products (increased usage of 10 percent), and next-generation launches (increased usage of 20 percent).

The popularity of other counter-generics approaches should hold fairly constant over the next two to three years, while survey respondents expect that a couple of tools—namely, pricing strategies and citizen petitions—will decline noticeably in prevalence.


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